I ran across an excellent article on peak oil and the IEA report. Here:
The Obama Administration is not likely to acknowledge Peak Oil, although the staff has no doubt seen the reports and statistics. If the new administration were to agree that Peak Oil is upon us, it would have to go all out, drilling in areas his constituency opposes and pushing hard for rapid construction of nuclear power plants, which Obama has previously not supported. And yet when the global economy revs up again in 2010 or even 2011, the demand for energy will be explosive and enduring. The global oil supply will be depleting 9.1% next year according to the latest IEA report. The IEA (International Energy Agency) forecasts that China, India and other developing countries’ demand will require investments of $360 billion each year until 2030. The agency says even with that investment, the annual rate of output decline will still be 6.4%. According to the IEA report, the global energy complex needs a minimum investment of a $1 trillion a year, and needs to find the equivalent of one Kuwait annually in order to replenish depletion and keep up with global demand. With the coming severe global downturn, drilling is slowing rapidly as the price makes current production uneconomic for many companies. And new investment in exploration isn’t likely as companies and countries retrench.
Continue reading at Financial Sense.
The guys at the Financial Sense Newshour have recorded a podcast triology about peak oil and the 2008 IEA report, which I find is really down to earth and is worth listening to. I decided to share this with you, as it is an invaluable resource in understanding the current crisis we are in. Oil prices will not stay down for long as production is being cut around the world. This and much more on the Financial Sense Newshour podcasts:
1. Mission Impossible part 1 - RealPlayer | WinAmp | Windows Media | Mp3
2. Mission Impossible part 2 - RealPlayer | WinAmp | Windows Media | Mp3
3. Mission Impossible part 3 - RealPlayer | WinAmp | Windows Media | Mp3
You can listen to all the podcasts here.
Of all the issues that were brought up during the presidential campaign, energy came in at the top of the list for President-elect Obama. I covered Obama’s energy plans in the previous post (here) and now is the time to take a look at what companies in particular will benefit from these plans.
Oil companies
One of Obama’s many plans was to provide short term relief to families at the pump. The idea behind it is to lessen the pain of high gas prices but essentially this means more demand for oil. The latest International Energy Agency’s report warns that we have to find three new Saudi Arabias by 2015 to keep up with demand. Existing oil fields are being depleted at an alarming rate and new discoveries are way behind future demand predictions. As conventional oil fields are being depleted, new, costlier ones (oil sands, offshore, heavy crude) are being put to use.
This only means one thing - oil has to go up. You can either buy oil futures, which is very risky (you should probably leave it to the experts) or you can buy stocks. Better still, there is DIG and DUG. These two exchange traded funds (ETFs) follow the price of oil - when oil goes up, DIG goes up; when oil goes down, DIG goes down. As simple as that. No short selling required - just buy DIG if you think the price of oil is going to surge, or, buy DUG if you think it’s going to fall. There are plenty of oil stocks to choose from and I won’t bother to list them all here, it would take too much space. But you can have a look at yourself here.
Renewable Energy
Obama wants to “help create 5 million new jobs by strategically investing $150 billion over the next 10 years to catalyze private efforts to build a clean energy future”. While there has been significant activity on the US renewables scene, this is the sign that everyone’s been waiting for. This signals a new era in renewable energy and here are some stocks to choose from.
- Suntech Power (STP) - a Chinese solar company with remarkable growth in the recent years. It expanded to the US market only a few years ago and is already making deals. More on Suntech in a previous post, here.
- First Solar (FSLR) - the first public traded 100% thin-film solar company. The cost of thin-film solar cells is expected to fall significantly over the next years. Thin-film is best for large scale installations (read: for utilities).
- LDK Solar (LDK) - another Chinese pure-play. High growth numbers, just signed a 3-year deal to provide BP Solar with 435 MW of multicrystalline silicon wafers expanding its North American presence.
- Fuel-Tech (FTEK) - provides engineering solutions for the optimization of combustion systems in utility, industrial, and municipal solid waste applications worldwide.
- ADA-ES (ADES) - develops and implements environmental technology, as well as provides specialty chemicals that enable coal-fueled power plants to enhance existing air pollution control equipment. This is a company with a very small market capitalization!
- Aventime (AVR) - a US bioethanol producer. It also produces various co-products, such as corn gluten feed and meal etc.
Click here for a full list of solar stocks (biofuels, solar, wind and more). You may also choose to invest in ETFs.
Nuclear
Securing the base load source for electricity with nuclear is a must given the greenhouse gases coming from coal and the current energy storage technologies (renewable is variable by nature). Obama has pledged to support the development of new, safe nuclear power plants and waste storage facilities. With that in mind, there is plenty to choose from. Nuclear is witnessing a comeback in many parts of the world making investing in uranium companies a solid investment decision.
- Constellation Energy (CEG) - Although not a pure-play, its Merchant Energy segment owns, operates, and maintains fossil, nuclear, and renewable generating facilities, and holds interests in qualifying facilities, fuel processing facilities, and power projects in the United States.
- Cameco (CCJ) -Explores, develops, mines and mills uranium to produce uranium concentrate worldwide (high value chain). It also operates in fuel services, electricity and gold.
Other nuclear power companies include Exelon (EXC), Entergy (ETR), Dominion (D), NRG Energy (NRG). Nuclear engineers and clean-up experts include Chicago Bridge & Iron (CBI) and Fluor (FLR).
Tags: biofuels, first solar, green investing, nuclear, obama, solar pv, suntech
In this week’s Inside Renewable Energy podcast:
The gears of the global economy are moving very slowly these days; yet, the renewable energy industry is still performing better than many other industries. However, the path out of the global credit crisis will be long and steep, making it more difficult for developers and financiers in the renewable energy industry to do business over the next six months to a year.
Listen here. You can also download the podcast as an MP3-file.
According to President-elect Obama’s energy plan, the government will have to invest seriously in renewable energy and energy efficiency over the next coming years. Before the elections, Obama pledged to invest $150 billion in renewable energy over the following ten years, in effect creating five million new jobs. He is also looking to extend the Production Tax Credit (PTC), creating a Renewable Portfolio Standard (RPS) and passing cap and trade legislation.
“President-elect Obama is the first national presidential candidate who has explicitly campaigned for renewable technologies and green jobs – and the U.S. will now more likely embrace more comprehensive policies that will drive these U.S.-created technologies to become integrated into our nation’s energy mix resulting in significantly lower energy imports and greenhouse gas emissions,” said Scott Sklar, President of the Stella Group.
Obama’s team, working together with the Congress, will also have to do something about Detroit. The Big Three have suffered substantial losses and cannot survive without some kind of aid. GM and Ford have both said that they would have to close shop in less than a year unless Washington does something to fix the situation. Obama has said that he wants to use less foreign oil and put one million plug-in hybrid cars on the road by 2015. He also wants them to be built in America. So why not just start making hybrids in the US? Well, solving the problem might not be as easy as you might think - GM, Ford and Chrysler haven’t really done a great deal to improve the overall mileage of their fleet and they are lagging behind with their hybrid cars, too. And now that they’re in debt, they can’t afford to spend the money on research, which is a must when developing a new technology. Somehow, Obama will have to solve that, along with soaring unemployment numbers and falling payrolls. There is a lot at stake in Detroit.
The Democrats will have a significant majority in Congress and this will definitely ease the passing of new laws and regulations. One thing is for sure - Obama can’t pass any legislation before January the 20th, the day of his inauguration. “The United States has only one government and one president at a time” Obama said. But although he is not yet the president of the United States, expectations are already mountain-high. It is expected that Obama will put together a detailed renewable energy plan during his first year as president.
The time for renewable energy has come. Get on the bandwagon.
Click here to read the follow-up story: Obama’s Energy Plan - Stock You Should Own.
Obama’s renewable energy speech:
Tags: obama, renewable energy
Some of our readers have already noticed that I haven’t listed any wind power stocks on the Green Stocks page. I have a very good reason for that – there are no pure play wind power stocks listed on the Unites States markets. The biggest player on the market is General Electric, but wind power is not really that significant for GE in terms of income. Therefore, I cannot even list it as a non pure play. Their wind turbine business is just not big enough to have them listed on our stock list.
But for those of you who are still keen on investing in wind power, which is a huge growth sector, there are plenty of stocks on other markets that are worth taking a look at. Although solar PV and algae biofuel are the new favorites of the renewables industry, the growth rate for wind power offers many opportunities for companies to make a substantial profit. Just take a look at the annual growth rates for wind power.
In 2007, wind power generated 0.3% of all the energy used in the world. Wind turbines are increasingly popular due to higher efficiencies and lower prices, as well as government incentives. In some countries, where government incentives for wind power are in place, the production price for wind energy is about the same as for energy produced from natural gas, which is a significant feat, if you ask me. In the US, the PTC (production tax credit) for wind (and geothermal) was just extended for a full year. The residential small-wind ITC (investment tax credit) was extended for 8 years. Read more about it in my previous post, here.
According to the Global Wind Energy Council, 20 GW of new wind energy capacity was installed in 2007, a 30% increase from 2006. The biggest markets for new wind turbines were the US, with 5.2 GW installed, followed by Spain (3.5 GW) and China (3.4 GW). The Council expects the wind power market to grow at least 20% a year through 2010. Wind energy companies can basically be divided into three distinct groups, although they sometimes overlap.
1) Wind turbine manufacturers, which are the biggest of the three, for example Vestas
2) Wind farm developers, for example Iberdola
3) Suppliers of technology, services etc. (the smallest), for example American Superconductor.
In the wind turbine manufacturers sector, large companies dominate the scene with just 10 companies making up 95% of the global market share. These are the companies, ranked according to Merrill Lynch and BTM Consult figures.
Vestas (Denmark)
Gamesa (Spain)
General Electric (US)
Enercon (Germany)
Suzlon (India)
Siemens (Germany)
Nordex (Germany)
Acciona (Spain)
Goldwind (China)
Although most people shy away from stocks at times like this, I am doing the opposite. And so should you. Green companies are way undervalued right now, especially given that Obama won the elections. If you haven’t heard about Obama’s renewable energy plans, then read this. This is going to change the world and if you don’t buy into this right now, you will be paying a much higher price in the future. Of course, each investor has to do his/her due diligence, but the fact is that most of the green companies will shine in the years to come, even though they might look like a strong sell as far as the immediate future is concerned. But you see, it’s not about that! If you were given the opportunity to buy Microsoft or Apple or even Google back in the days when their stocks weren’t so gloomy, would you have done it? Did you? What about now? In the next 20 years we are going to see a huge expansion in the renewables industry and if you want to be a part of it, now’s the best time. Good luck!
If you are interested in renewable energy, then you should probably check out the REN21 Renewables 2007 Global Status Report, which is also where I took the chart from. Also, have a look at the new episode of Inside Renewable Energy. And don’t forget to sign up for my RSS.
Tags: investing, wind energy, wind power
We live in a world where the quality or the price of a product no longer
matter as much as it used to. Markets used to be simple: you took your product on the town marketplace and sold it. Whoever offered the best price and quality, made the biggest profit. Usually there were only a handful of butchers, weavers and bakers, which enabled them to control the market somewhat, depending on the size of the market, of course. Big cities had more competition while villages had to do with what they got. That’s not the case anymore. When you go online, your options are virtually limitless. Thousands of weekly magazines compete for customers, hundreds on new cars hit the market every year, just look around and you will see the endless competition that we live in, online and offline.
iPods and Hummers
People don’t buy iPods because they are the best portable music players on the market. There are many manufacturers that make better and cheaper products. They might even have the looks of an iPod. We don’t buy SUVs because they are safe or fuel efficient. Actually, finding a safe and fuel efficient SUV might prove to be an enormous challenge. So what is it that makes people buy products that are not really that good and cost more than the average?
The answer is simpler than one might imagine. The answer lies in the image, or more precisely, the narrative, or, if you like, the story that these companies sell us. Apple sells us the story of an outlaw in the computer/electronics world. Most of us have used Microsoft Windows at least once in our lives, and it is more than likely that it has had an error or a malfunction of some sort during the time we had to use it. Apple contradicts itself to MS and other similar products and has won a great deal of users this way. Combine that with an intuitive user interface, good design, fewer malfunctions and you’ve maximized your profit potential in a way that MS can’t. And it works! Apple’s iPod is by far the single leading portable music player in the world. Have you got one?
But you know what? There is a fundamental difference between Microsoft and Apple. Microsoft only sells software, but Apple sells you the software with a computer. And that’s the biggest reason why Windows is considered slow – any computer manufacturer can put Windows on its computers and sell it regardless of the minimum computing power the software would need in order to work properly. You would be better off buying a powerful computer with Windows on it, rather than buying an overrated Apple.
But what’s the story that SUV salesmen sells us? Well, if you haven’t figured it out already then let me explain it to you. First of all, SUVs are big. We, humans, associate the size of a car with safety (at least many of us do), the same can be said for men - the bigger a man is, the stronger he is perceived to be. The bigger an car is, the more likely it is to survive a crash on the highway. It is either they or us who will die in an accident. Chrysler Neon vs. Chevy Tahoe, anyone? Unfortunately for the millions of SUV owners, SUVs are more dangerous than your average small European car. They roll over easily (which usually results in brain damage, lots of broken bones or death, not to mention a huge hospital bill) and in a frontal collision, the engine is likely to crush the front passenger and the driver. The story that they sell us is a story of bigger and better. SUVs are associated with freedom more than any other type of vehicles, because you can take it off-road, oblivious to the fact that most drivers never do. But the latter doesn’t really matter, what matters is the opportunity to go off-road. And more likely than not, SUVs look intimidating. So there you have it, everything an American could wish for packed in a four-by-four - freedom, power and opportunities (of course, this is a simplistic explanation – not all Americans crave for bigger, better, stronger etc.)
Green Energy – Our Story
So what’s our story? What is the story of clean, renewable energy? It is a story of independence, of a better, cleaner world. Of a world where children no longer have to die from asthma and where global warming is a long-gone threat. Solar photovoltaic cells are now available for private households and one can literally go off the grid – i.e. be independent of the utilities. There are thousands of households cut off from the grid, as there are thousands of boats and yachts that use solar PV cells to produce electricity. If that’s not independence, then what is?
The renewables sector will encompass all walks of life and it will change the way we see the world. Simply put, our understanding of the world has already started to shift towards a more holistic one. One that is not linear, but circular.
But…
We have to realize that big changes don’t just happen overnight. They are part of a bigger paradigm shift. Change takes time to manifest itself, but when it’s time, it really shows. It was the 70s that saw the implementation of the first new technologies and solutions. For almost thirty years, not much changed. Until oil prices skyrocketed, as did prices for natural gas and uranium. The renewable revolution started to unravel, steadily, at first, but gaining momentum as years went by.
For me, day that defines whether the alternative energy economy will be given a green light is November the 4th. According to the polls, Obama is ahead of McCain in most states. If the election results were to be decided on poll results, he would have already won. So what am I trying to say? I’m telling you that if Obama wins, we’re gonna enjoy 20+ years of growth and a cleaner, better world. Apollo Project, anyone?
According to the Apollo Alliance, which Obama supports, a rigorous program channeling $500 billion over 10 years to alternative energy projects is needed. That money would be dedicated to:
- Generate clean power (25% from renewable sources by 2025)
- Improve energy conservation and efficiency
- Cut energy bills
- Improve US technological and industrial capabilities
- Create 5 million green-collar jobs
Compared to what we’re currently facing, each one of those bullets would be a welcomed change.
25% renewable power compared to today’s 6%.
Improved energy conservation and efficiency instead of complacent energy waste and misuse.
Reduced energy bills compared to the current high and volatile prices.
A renewed dedication to science and math, from childhood on up, that puts America back on top of today’s information-based economy and allows us to export energy technology to the rest of the world.
The creation of 5 million new well-paid and secure green jobs instead of the 760,000 we’ve lost so far this year.
Such is the second pillar of an alternative energy economy: initiating programs from the top down that facilitate a culture change in which the country makes solving the energy crisis a priority and an opportunity.
Paradigm Shift
Women began to demand the right to vote in England around the time of WWI. Why? Most of the men were deployed in battle and women had to pick up their jobs in factories. If they could do the job just as men could, then why should they be denied the right to vote? And so, in 1918, most women in the UK were granted the right to vote. This is one the many things that the war changed along with all the advances in technology that led us to a higher understanding of chemistry, biology, physics and ourselves, for that matter.
The American people have been woken up with the 8 horrible years of Bush. People who haven’t voted before in their lives, old and young alike, are lining up to vote Obama. Together they can prevent another 8 years of McSame. And it’s not just renewable energy that will benefit, families with children and a low income will benefit, too. Some people say that his thinks too much like an European by agreeing to hand out money to people who are worse off. Is that such a bad thing? A country should be more than the safekeeper of private property and maker of laws. It also has to look after its own, be it veterans or homeless people.
What I’m hoping for is not only a better future for the renewables market. I’m hoping for a better America and a better world. Obama will deliver, I am sure.
Tags: apollo project, obama, renewable energy economy, renewable energy revolution
This week I have published a few posts which are not directly associated with green investing or renewable energy. But I figured they were useful pieces of information and so decided to share these with you. So is this one. The American Dream for more and better has been the force that drove Americans for decades. But, as Peter Whybrow argues, this dream is not suitable for the modern era. Here is a short description of his latest book - American Mania: When More Is Not Enough - on the same topic. Read it through and take a while to contemplate on this: are you a victim?
Despite an astonishing appetite for life, more and more Americans are feeling overworked and dissatisfied. In the world’s most affluent nation, epidemic rates of stress, anxiety, depression, obesity and time urgency are now grudgingly accepted as part of everyday existence—they signal the American Dream gone awry.
Peter Whybrow, Director of the Semel Institute for Neuroscience and Human Behavior at UCLA, grounds the extraordinary achievements and excessive consumption of the American nation in an understanding of the biology of human craving and the reward system of the brain—offering for the first time a comprehensive explanation for the addictive mania of consumerism. Whybrow’s analysis combines careful reflection on the roots of American culture as a laissez faire competitive free market economy, with an exploration of the nation’s migrant temperament and its role in the creation of our ambitious, restless society. Taking into account our ancestral biology, he sheds critical light on the dangerous misfit emerging between our consumer-driven culture and the brain systems that evolved to deal with privation 200,000 years ago. In the absence of any controls—any cultural or economic constraints—we are easily hooked on our acquisitive pleasure seeking behaviors. Whybrow shows how human biology is ill equipped to cope with the demands of the 24/7, global, information-saturated, rapid-fire culture we not only have created, but that we have come to crave.
Drawing upon rich scientific case studies and fascinating portraits, American Mania presents a clear and novel vantage point from which to understand the most pressing social and medical issues of our time, and also offers readers an informed approach to addressing these problems in their individual lives.
American Mania: When More Is Not Enough at Amazon.com
A new episode of Inside Renewable Energy, titled Touring the Steamboat Geothermal Plant, is available at Renewable Energy World:
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